Names And Claims – ESMA Probes Use Of Generic ESG Terms In EU Funds

ESMA utilised natural language processing ("NLP") techniques to analyse the names of more than 36,000 funds with €16 trillion of assets combined with a dataset of over 100,000 fund documents. It found that the share of UCITS with "ESG" - or environmental, social and governance - in their name has increased from less than 3% in 2013 to 14% this year.

ESMA's study points to the following findings:

• An increasing number of funds include ESG terms in their names and, of the ESG terms included, funds prefer to include broad ESG terms (such as "sustainable") rather than more specific environmental or social words. There is also evidence of high and consistent investor appetite for funds with an ESG-related term in their name, relative to funds without any ESG words in their name.